Retailers see fewer gift card sales

Saturday

NEW YORK (AP) — As merchants look to this weekend and the rest of the Christmas aftermath, they’re counting on droves of gift card-toting customers to return to malls.

But those numbers might be smaller as the industry braces for what some analysts believe will be a second consecutive holiday season of declines in gift card sales.

The final word on holiday gift card sales is not out. Mall of America was seeing gift cards flat through this week compared with a year ago. Mall operator Taubman Centers cited lukewarm sales heading into the final week before Christmas but saw a rebound in recent days as threadbare shelves have left last-minute shoppers no other choice.

Overall, the recession has stolen gift cards’ steam. Reduced consumer spending has extended to gift cards, but frugal shoppers are also turning to buying discounted gifts so they can stretch their budgets. Also troubling is that recipients will likely be stingy when they redeem them, focusing only on deeply discounted items, as they did last year.

That poses challenges for the critical week after Christmas and for 2010 as consumers typically spend more than the card’s value. Gift card sales also are a key way for stores to drive traffic in the first quarter, traditionally a quiet time for the industry.

This holiday season, merchants were pulling out all the stops to put them in the hands of consumers. Catalog retailer L.L. Bean, for example, offered a free $10 gift card with purchases of $25 or more; last year, shoppers had to spend $50.

But Cindee Weiss, 41, who works in magazine publishing, hasn’t bitten. In Christmas seasons past, she would spend a total of $100 on gift cards at Gap or Anthropologie for four friends, but this year, she’s baking cookies and brownies for them. “In this economy, I have to be a little more aware,” said the Manhattan resident, citing an uncertain job market.

Britt Beemer, chairman of America’s Research Group, predicted another holiday season of weak gift card sales would be “devastating for retailers.”

Another problem is that more shoppers are giving cash this season because they couldn’t get to the stores or they also want to be even more practical, Beemer said. Typically, about 75 percent of those dollars don’t go to stores but toward paying bills or to restaurants, he said.

“Gift cards’ popularity hasn’t died, but the recession has changed the way that people give gifts,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy.

According to a consumer survey conducted for the National Retail Federation, gift cards still remain the most requested holiday item, but several industry surveys have found that the average person plans to spend less on them than last year.

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